“As demand for talent picks up, the balance of power in business is rapidly shifting from the employer to the employee,” says Josh Bersin, principal and founder of Bersin by Deloitte, Deloitte Consulting LLP. “Moreover, workers are becoming more mobile, contingent and autonomous, and as a result, harder to manage and engage—and with that the overall costs of talent.”

The Deloitte report, based on a survey of 3,300 HR and business leaders in 106 countries, reveals that analytics is one of the areas where organizations face a significant capability gap.¹ Three quarters (75%) of respondents cited talent analytics as an important issue, but just 8% believe their organization is “strong” in this area—almost exactly the same as in 2014.

“HR and people analytics have the potential to transform the way organizations hire, develop and manage people,” observes Jason Geller, principal, Deloitte Consulting LLP, and national managing director of the U.S. Human Capital practice. “Leading organizations are already using talent analytics to understand what motivates employees and what makes them stay or leave. These insights help drive increased returns from talent investments, with huge consequences for the business as a whole,” he adds.

A Case Study at ConAgra

HR leaders at ConAgra Foods are using analytics to calculate and report the total cost of its workforce rather than leaving this important task solely to the finance function.² The company had struggled to collect accurate data about its workforce. Information was spread across the organization, making it difficult to reconcile. Analytics solutions allow the company to gain better insights into employee data, providing current and projected headcount as well as total workforce costs.

Jason Geller

Following a major acquisition in 2012, business leadership gave HR a mandate both to acquire the best talent in the business and to understand the true cost of its talent. HR’s analytics team began searching for a solution that would deliver extensive self-service analytics capabilities to stakeholders as well as provide accurate workforce costs and support future planning scenarios.

Partnering with finance, the team mapped all available data and processes. The HR system held employee-specific data on salary and benefits, while an ERP system from finance provided aggregate cost data. Using a cloud-based system, the team aggregated all workforce cost data. To calculate the total cost of the workforce, the team developed a taxonomy of the different elements going into this figure, including direct compensation, benefits, employee costs for labor, and workforce overhead, as well as the subcategories under each.

After collecting and aggregating the data, ConAgra can now visualize these different elements in a single, interactive application displaying a wide range of metrics, including actual and planned headcount and actual versus planned workforce costs. HR and finance professionals are able to analyze and optimize investments across a wider range of workforce costs. The company can now see the impact of spending on a minute level and understand how workforce costs impact its financial plan. For instance, the company can model workforce costs at two different locations, or better understand the cost of entering new markets. In the past, these calculations would have been highly time-consuming and error-prone to compute by hand.

While progress is being made in the use of talent analytics, Deloitte research shows that it will take several years for businesses to develop and absorb talent analytics technology. “The sooner HR teams start working on building this capability, working with finance, the better positioned they will be to address future talent issues,” notes Mr. Geller.

Leadership and Skills Gaps

Leadership gaps—the most critical issue cited in last year’s survey—continued to be top of mind for HR and business leaders, 86% of whom cited it as a top issue this year. Recognizing the fact that a general lack of skills is likely to impede business growth, 85% of HR and business leaders ranked learning and development as a top issue, compared to 70% last year, making this the third most critical issue in this year’s survey. Meanwhile, 80% of respondents cited workforce skills as a top issue (up from 75% last year), and 35% rated the lack of skills in HR as a “very important” problem, up from 25% last year.

Brett Walsh

“There are significant shifts happening in the global workplace that business must actively manage,” says Brett Walsh, Global Human Capital Practice leader, Deloitte Touche Tohmatsu Limited. “Skills needed on the job are changing faster than ever, and there’s an urgent need for organizations to re-evaluate their learning programs and treat leadership development as a long-term investment, rather than a discretionary training spend item when times are favorable.”

Cognitive Computing

The survey also revealed that increasing cognitive power of computers and software is challenging organizations to rethink the design of work and the capabilities their employees need to be effective. More than half (58%) of leaders indicate that “redesigning work with computing as talent” is an important trend. However, only 5% of executives surveyed say they have a strong understanding of what computing will do to their workforce.

“There is a need to redesign the workplace to integrate technology, particularly in fields such as finance,” adds Mr. Bersin. “By leading the process of ‘job redesign,’ developing hard-hitting training programs, and working with technologists on the implementation of new technology, talent and HR leaders can help ease the transition of these technologies into the workforce and, ultimately, improve productivity and engagement.”

Endnotes1. The “capability gap” is defined as the difference between an organization’s “readiness” to address the issue and the organization’s “importance” of that issue. (Measured on a 0-100 scale.). If an organization rates an issue as 80% “urgent” but is only 50% “ready” to address it, their capability gap is -30. In each case, a more negative number translates to a greater gap. A greater gap means that this issue warrants more attention and investment than others.2. Karen O’Leonard, Continuous, cost-driven workforce planning: ConAgra foods transforms the role of HR through analytics, Bersin by Deloitte, January 2015, http://www.bersin.com/library.

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